Definition

For related topics --
See teleology for a discussion of causality directed at management practice and organization theory.

See history of causality for a philosophical history of the development of views of causality.

See Aristotle on causality for a look into Aristotle's view on causality and teleology.

See causal relationships for a discussion of cause and effect.

See organization for a discussion of ways of thinking about causality and organization.

See management science for a discussion of causality and management.

See organizational theory for a discussion of causality and organizations.

See self-organization for a discussion of causality and emergence of new forms in organizations.

Importance of causality to strategy --
Strategy is about organizations, about developing organizations with sustainable advantage. The better we understand organizations, the more effective their development can be. Understanding organization leads to understanding organizations. At the heart of understanding organization is causality. Causality addresses how and why organizations move into the future, becoming what they become. Management's view of causality, whether explicit or implicit, leads to particular approaches to leadership, management, and, of course, strategy.

For example, most managers believe there will not be any coherent patterns in the development of an organization without a blueprint or plan. This belief is coupled with a belief in a predictable future, both for the organization and its related population of organizations. This belief infers that cause and effect, causal links, can be identified by managers and be used to predict and control the future.

Alternatively, complexity science is now providing insights into the characteristics of complex organizations. This science pegs organizations' primary causality as transformative. With transformative causality, novelty arises in the present, making the future unpredictable. If this is truly the case, then many common management and leadership activities must be based on illusory ideas about what these activities actually achieve (Stacey, 2000, pp 18)

The types of thinking associated with the different types of causality, as we will see, are not right or wrong in general, but are better suited for some situations than others. This is especially pertinent in developing and applying thinking types for all aspects of strategic management, such as strategy formation vs. strategy execution.

Introduction to causality --
Causality is the relationship between cause and effect. Knowing the cause, understanding the particular type of causality involved, tells you what kind of effects can occur. Management practices have a causality embedded in them. This embedded causality invisibly guides the practice, the desired effect of which may or may not be what management is intending. The search for understanding the causality in management practices has its roots in philosophical explanations of causality and the natural sciences which serve as a source domain for organizational theory and management sciences from which management practices develop.

The causalities embedded in management practices follow Stacey's (2007, 2003, 2001, 2000) classification -- efficient, rationalist, formative, and transformative. This classification of causality has its basis in both philosophy and natural sciences. From the philosophers we have - Newton's efficient cause in the mechanical view of the universe, Kant's rationalist and formative causality distinguishing between autonomous humans and formative systems, and Hegel's transformative causality accounting for the emergence of new identity in organization. These causalities are revealed in the natural sciences studies of organization - in the branches of Newtonian physics, systems and complexity science.

In general, the natural sciences serve as a source domain for the social sciences, with their causalities preserved in their analogous social sciences. These causalities are then embedded in the management practices that derive from organization theory and management science. Newton's efficient causality is evident in scientific management that arose in the early 1900s. Kant's rationalist and formative causalities are evident in the systems sciences and the plethora of management practices derived from them. More recently, Hegel's transformative causality has become visible in complexity sciences that reveal models for self-organizing self-transforming systems - the insight from which serves to provide understanding of how human organizations evolve and management practices that can foster this evolution.

Becoming familiar with the causality associated with management methods can go a long way towards proper application of those methods. This is especially true in strategy formation and strategic management.

Causal frameworks -- Ways of thinking about causality --
Stacey (2007, 2003, 2001, 2000) explains causality in the context of why organizations become what they become. Stacey (2007, pp 246) has distilled his explanation of causality into a relatively simple comparison of four different ways of thinking about causality -

Efficient cause

Nature of movement -- Corrective repetition of past in order to realize an optimal future state

Cause of movement -- Universal, timeless laws of an 'if - then' kind

Rationalist cause

Nature of movement -- Towards rationally chosen goals for the future in order to realize a designed, desired state

Cause of movement -- Human reason

Formative cause

Nature of movement -- Unfolding of enfolded mature form in order to realize that form in the future

Nature of movement -- Iterated interaction perpetually constructing the future in the present in order to express continuity and potential for transformation in identity at the same time

Cause of movement -- Responsive processes of local interaction between entities in the present

These four ways of thinking about causality cover the spectrum of causality, at least causality ultimately relevant to human organizations. These causalities are embedded in organization theories and management practices. As such, understanding the underlying causality of the practice enlightens management in the selection of approaches to management based on inherent causality, a practice's bent in -- shaping, organizing -- moving the organization into the future.

Constructing a causal framework --
Though there are many dimensions or aspects of causality that can be examined, there are two key dimensions of causality that distinguish one cause from another that is especially relevant to strategy. This distinguishing framework builds around to key questions to reveal, on a very fundamental basis, what is going on in an organization -- 1 - what kind of movement into the future is being assumed? and 2 - why is the organization moving into the future? (Stacey, 2000, pp 14)

First is the kind of movement into the future that is being assumed. A key distinction between teleological frameworks is whether the movement toward the future is a --

known or

unknown state.

Second is the reasons for the movement into the future. ""For the sake of what?"" is a phenomenon moving? A key distinction will be whether it is assumed that a phenomenon moves toward the future in order to realize --

some optimal arrangement

a chosen goal

a mature form of self

continuity and transformation of its identity

Sciences and causality --
For the relationship between branches of science and causality see science.

Causality in management practices --
For the connection between the branches of natural science and their related causalities with management practices, including strategy, see management science.

Causality in views of organizations --
For causal perspectives of organizations, see organization types in organizational theory. These causal perspectives of organizations align with the related causalities assumed in management theories and practices, which, of course, has significant implications for strategy.

Causality, organizations, and management -- Why organizations become what they become --
Causality is why organizations become what they become. Understanding causality seeks to answer the ""why"" question regarding organizations.

Natural science, a source domain for management practices --
Causality is central to the understanding and effective application of management practices. Management theory and practices are based on branches of natural science, each with their related causality. Natural scientific theories are imported into explanations of human action and organization, that is, natural science serves as a source domain for what ultimately becomes organizational theories and management science. Knowing the natural science roots and the related causality of management practices provides management with discernment regarding their application.

Causality, teleology, and purpose are interrelated. See teleology for further exploration of why ""why"" is important to management science and Stacey's teleological frameworks revealing the causality associated with branches of natural science. See science for the branches of science and organization types for the organization theory and management practices associated with each branch of science.

Causality and knowledge --
Causality is at the heart of the subject of knowledge for comprehending nature, people, and organizations. Understanding the nature of cause and effect determines what is knowable and what is not. Whether cause and effect is knowable before hand, determinism, or not knowable before hand, indeterminism (see indeterministic), is a significant factor between approaches to knowledge creation, learning, and management.

Causality and determinism --
In a deterministic world, cause and effect are knowable, thus advantageous designs of future states of a system can be developed. In an indeterministic world, where the future is not predictable, an organization that is allowed to self-organize is more advantageous than one designed for a state unlikely to exist.

Management implications --
In the case of management, the term 'pragmatic' preceding the deeper philosophical issues begins to bring them into perspective - answering the ""so what"" factor.

If a system, or set of events is pragmatically deterministic, i.e. the cause and effect can be pragmatically determined, then the future is predictable and the value of knowing the future makes the effort of determining what that future will be worth while. Management then provides value through the design and implementation of future states based on knowing the future.

If a system or set of events is impractically deterministic or truly indeterminate, the future is unpredictable. In this case, efforts to predict and define the future are wasted. Other efforts are called for, such as experimentation, flexibility development, or fostering the self-organization capabilities of the organization.

Business architecture implications --
The architecture of a business organization in an indeterminate world will focus on principles and concepts which complement the self-organization capabilities, providing diversity and removing constraints to the ability of the organization to spontaneously transform itself. If the business organization happens to find that its environment is predictable, its approach to design may benefit from more specificity as to the next state of the business to be put in place, tending more towards business design than strategic competency development.

Causal frameworks in greater depth --
Stacey (2000, pp 14 - ) has defined five teleological (causal) frameworks providing insights into various management approaches. This section provides a deeper examination of types of causality, not to replace the framework given above, but to provide for a deeper understanding of it. See teleology for Stacey's view on teleology as it relates to organizations. The reason for making these causal distinctions is to enable one to obtain some insight into the fundamental differences between different ways of understanding change in organizations.

Aspects of causality addressed by the teleological framework --
The teleological framework addresses the following aspects of causality...

The kind of movement into the future that is being assumed -- movement toward a future that is...

The reason for the movement into the future -- movement for the sake of, in order to...

The process of the movement into the future -- the cause of movement...

The source of meaning...

The kind of self-organization implied (i.e. learning, knowledge creation, production of novelty)

The nature and origin of variation...

The origin of freedom and the nature of constraints...

Efficient cause (secular Natural Law Teleology) --
and efficient cause (timeless rules of an ""if - then"" kind) in which movement is perfectly regular and predictable and the parts add up to the whole. This teleology survives in modern times as an unreflected assumption about the nature of reality and as an assumption of the existence of optimal states. Everything that is possible is already given and there is no change under the sun.

Change -- In regards to change, there is no concept of self-organization or emergence, thus there is not transformative change, only change as a movement to perfect. Change comes from an external agent.

Time -- In regards to time, time has no dimension as hidden order is revealed or discovered in realizing or sustaining an optimal state.

Causality and novelty -- The theory of causality here is that of over arching secular Natural Law Teleology in which perfection, timeless stability, is revealed through the operation of efficient causality. There is no notion of self-organization, and organization is continuity of a perfect, optimal kind. Organizations are governed by efficient cause, thus they can function like machines to achieve purposes specifically chosen by their managers.

Philosophical source -- This teleology comes from Newtonian mechanics used to explain the universe as a mechanism being applied to organizations.

Self-organization --
There is no self-organization.

Rationalist causality --
Rationalist causality is movement toward a goal autonomously chosen by humans as an expression of universal ethical principles. Freedom means that the final form is unknown. Unpredictable, truly novel change is thus possible and stability is sustained by ethical universals. In other words, identity, or organization, evolves in essentially unknowable ways. Here the unknowable whole is achieved through choice, or design of the parts.

Objective manager -- The manager or leader is understood as the one who observes the causal structure of an organization in order to be able to control it. The manager can choose the goals of the organization and design the systems or actions to realize those goals. The possibility of so choosing goals relies on the predictability provided by the efficient and formative causal structure of the organization, as does the possibility of managers staying ""in control"" of their organization's development. Organizations become what they become because of the choices made by their managers.

Change -- In regards to change, there is no particular implications for self-organization and change is the consequence of human choice. Though this allows for freedom to choose, how choices result in novelty are not explained.

Time -- In regards to time, cause is human motivation that lies in the future.

Causality and novelty -- The theory of causality here is autonomously chosen goals reflecting universal ethical principles. Movement is toward a goal autonomously chosen by humans as an expression of universal ethical principles. Freedom means that the final form is unknown. Unpredictable, truly novel change is thus possible and stability is sustained by ethical universals. In other words, identity, or organization, evolves in essentially unknowable ways. Here the unknowable whole is achieved through choice, or design of the parts. Organizations are designs chosen by humans and humans can design true novelty.

Strategy, novelty, emerges from the mind. Rationalist teleology actually begs the question of novelty origination, since it provides no explanation of how the mind generates novelty. On the other hand, transformative causality does have an answer to that question in the form of complex responsive processes.

Philosophical source -- This teleology comes from Kant's view of humans and human actions, where humans have freedom within universal ethics.

Self-organization --
There is no self-organization. Change comes from human choice but how choices result in novelty is not explained. The motivating force of evolution is man's freedom, or man expressing freedom. Organizations become what they become because of the choices made by their managers.

Formative causality --
Formative causality is movement to a final form that is a pre-given state already contained within the organization. This means that with change is continuity of identity, with only context-dependent variations in its manifestation. In this framework there is no explanation of true novelty. Self-organization here is repetition, with variations in manifestations of identity but no transformation in that identity. In other words, identity is developing in knowable ways.

Time -- In regards to time, a mature or final form is unfolded form an enfolded from a whole already enfolded in the nature, principles, or rules of interaction. This is a macro process of iteration, that is, formative cause that lies in the past enfolded form and/or unfolded future.

Change -- In regards to change, there is a form of self-organization towards a mature state of the system that reproduces forms without any significant transformation.

Causality and novelty -- The theory of causality here is one of functional, formative processes, formative cause, producing movement to an already given final state. Organization is continuity of form with small variations, all enfolded so that genuine novelty is not possible.

Philosophical source -- This teleology is Kant's view of organisms and organizations. It is a functional teleology, with the organization's continuity of form with small variations.

Formative self-organization --
In the case of formative self-organization as cause, what emerges, or unfolds, is a form enfolded in the organization. Therefore, though the form is emerging, it is also predictable. A final state can be known in advance, or the future is theoretically predictable, or predictable to a great degree. For example, an acorn becomes an oak. The final number of leaves and branches or even lifespan may be unpredictable, the general form will be an oak tree. This is a type of self-organization that reproduces forms without any significant transformation

The formative self-organizing process produces both stability and change but the pattern of change is in some sense predetermined so that there can be no significant change in the level of the form, or the whole. This type of change cannot encompass true novelty, the production of form that is entirely new and thus unknowable. Change is a shift from one given form to another due to sensitivity to context. The organization changes through stages of development.

Transformative causality --
Transformative causality is movement toward and unknown form; that is, to a form that is in the process of being formed, to a form that is itself evolving. Truly novel change is possible and self-organization is a paradoxical process of repetition and potential transformation. It is emergence of identity in a transformative, self-organizing process and paradoxical experience of identity in transformation. Here teleology is not contained in the process since the teleological is being formed. In other words, identity, or organization, is evolving in unknowable ways, being created as it goes along. Here, the parts form and are formed by a whole that is under perpetual construction.

In iteration, the continuity of identity is always open to change. Self-organization is then a process of interaction characterized in an essential way by paradox and the emergence of the truly unknowable. What is being so organized is identity. It is a process that produces novelty, the creatively new that has never existed before.

Change -- In regards to change, a form of paradoxical self-organization is implied, characterized by both continuity and potentially radical transformation.

Time -- In regards to time, variation arises in micro diversity of interaction, transformative cause arises in the present, as does choice and intention.

Causality and novelty -- The theory of causality here is transformative. Micro diversity, the processes of micro interactions in the living present forming and being formed by themselves. The iterative process sustains continuity with potential transformation at the same time. Variation arises in micro diversity of interaction, resulting in transformation. In iteration, the continuity of identity is always open to change. Self-organization is then a process of interaction characterized in an essential way by paradox and the emergence of the truly unknowable. What is being so organized is identity. It is a process that produces novelty, the creatively new that has never existed before.

Philosophical source -- This teleology is Hegel's view that applies to both human action and nature. It is a paradox of stability and change.

Transformative self-organization --
In the case of transformative self-organization there is no form enfolded in the organization. New forms arise in the present, resulting in an unpredictable future. Transformative self-organization is paradoxical, characterized by both continuity and potentially radical transformation.

The source of change is in the detail of interactive movement in the living present, movement of a circular kind that is reflected in the macro sweep of time, past and future. In complexity terms, this is a fractal process. Micro-diversity in local interactions, micro-interpretations, transforms global patterns, paradoxically, forming while being formed. Variation in these interactions results in novelty. True novelty comes about from this process.

In this iterative interactive process, the continuity of identity is always open to change -- gradual or abrupt changes in identity or not change, depending on the spontaneity and diversity of micro interactions. Identity is continuously evolving and changing, there is both the possibility of sameness, or continuity, and the potential for transformation at the same time.

Adaptionist causality --
Adaptionist causality is evolutionary. Formative cause is an accident, chance variation followed by competitive selection operating as a search mechanism to find a stable strategy or fitness peak.

Change -- In regards to change, this teleology implies a chance-based competitive search for optimality with a weak form of self-organization confined to the selection process. Change is movement to a stable state of adaptation to the environment.

Time -- In regards to time, formative cause lies in the future selected adapted state.

Causality and novelty -- Formative cause is an accident, chance variation followed by competitive selection operating as a search mechanism to find a stable strategy or fitness peak. The future environment is supposedly unknowable but natural selection's rules make the future knowable for an organization. This is contradictory. A process of random variation in individual entities, sifted out for survival by natural selection. This is formative cause.

Philosophical source -- This causality is from the works of Darwin as supplemented by Mendel, Mead, et al.